New set of indexes for US investors possible if limitations imposed

If United States-based portfolios faced investment limitations on Chinese shares included in MSCI global benchmarks, the index provider said it would not pare the weighting of Chinese stocks but consider building another set of indexes specific for US investors.

"Our indexes are built from a global perspective. They cater to the needs of global investors around the world," said Sebastien Lieblich, MSCI's managing director and global head of equity solutions, said in a teleconference on Tuesday.

"If some constraints are put upon specific investors in a specific country, then that should not impact our global indexes," he said.

The US government was reported in late September to be mulling policies restricting US portfolio investment into China.

The last step of MSCI's three-phase plan to increase the weighting of A shares was implemented successfully on Tuesday, Lieblich said. More than 200 A shares were added in to the MSCI Emerging Markets Index and other benchmark indexes, and the inclusion factor for the existing A-share constituents was raised from 15 percent to 20 percent.

There will be consultations over further A-share inclusion, and consultation plans to collect global investors' opinion over whether to add small-cap A shares, according to Lieblich.

Other details of future consultations or the roadmap of further inclusion implementation have not been settled, he said.

China's future steps in resolving foreign investors' remaining concerns — such as the lack of access to hedging and derivative tools, the short cycle of A-share settlement, and the holiday risk among the Shanghai-Shenzhen-Hong Kong markets — will largely determine future inclusion steps, he added.